9/23/2007 @ 9:20AM

Latino Connection

Jorge Perez marketed Miami as a condo haven for rich South Americans. Now Florida’s real estate hangover has him looking for riches in South America.

Jorge Perez vividly recalls the day he was forced to flee Cuba. He was 10 years old, and his dad, a businessman who had worked for
Eli Lilly & Co.
in Argentina, had moved the family back to his homeland a year earlier to take over his inheritance: a cattle ranch, sugar plantation, drug wholesaler, pharmacy and more. The family lost it all in the days after Fidel Castro’s communist rebels nationalized the assets of the rich.

On that fateful day, among the panic-stricken mob at the Havana airport, his mother took off her jewelry and handed it to Jorge’s tearful grandmother to prevent security guards from confiscating it. She kept only her wedding band and a few pieces she prized for sentimental value–and the guards relieved her of even those as the Perezes boarded a flight to Bogotá, where they would resettle into a starkly more spartan life. Once there, Jorge says, his mom, who had never had to work, took two jobs to help his dad support the family. By day she taught high school and at night she translated documents.

“I saw my mother go from riding in a chauffeur-driven car to taking the bus,” Perez says. “We never experienced a hard exile,” he hastens to add, but the loss and trauma steeled him. His parents hadn’t socked away any money in the U.S. as other wealthy Cubans had, and they were forced to leave with nothing. That is one reason why Perez today stocks cash–lots of it.

Half a billion dollars in cash now underpins his closely held development company, Related Group. Jorge (he pronounces it “George” when in North America) Perez has built enormous wealth of his own, starting on the shores of Miami, home to hundreds of thousands of Cuban refugees who fled Castro as his own family had. He is the builder behind six luxury condos that, like giant exclamation points, punctuate the skyline of the famed South Beach. They star in the opening credits of the recent rendition of Miami Vice, and Perez, still slender at 57 and swathed in layers of white linen, could play a role in the film.

Now worth $1.8 billion and 271st on The Forbes 400, he has built 15,000 condos in Florida in ten years. His most lucrative push began in the mid-1990s, letting him reap prodigious profits on 1,400 units in South Beach, 4,000 in downtown Miami and 10,000 luxury cribs in Fort Lauderdale, West
Palm
Beach, North Dade and South Broward counties so far. In Apogee, a 22-story 67-unit tower on Biscayne Bay that is fully presold and will open by the end of the year, he landed $5 million per home, fed by the seemingly unstoppable housing boom.

Whoops. Now perhaps 40,000 Florida condos are up for sale and lacking buyers. Condo sales are down 19% in a year. Perez has seen a disturbing rise in defaults among buyers who were about to close on their condos, from 0.5% to 2.5% of pending deals recently. Now he is bracing for that rate to double and says it could rise from there–and if his customers don’t close, he won’t get paid. Related is setting up a team to manage these properties until they get sold; he stubbornly refuses to cut his prices. So far.

Even as the market collapses around him, Perez is in the midst of starting five more projects in South Florida. He won’t line up financing until at least half the units are presold and under contract. By year-end, in part because Related Group also sells a cheaper line of condos now, its revenue is expected to fall by one-third (to $2 billion); its net profits will decline 40% (to $250 million). In 2009, revenue may fall another 25%, to $1.5 billion, he says. “We are in the rebuilding stage.”

From his office in downtown Miami he looks out over Biscayne Bay and seven of his buildings now under construction; at one point in an interview he stops talking to point out a dolphin or two swimming in the surf. “I am a born worrier. I wake up in the morning and think everything will collapse,” Perez says, oblivious to the possibility that, um, this fear isn’t just a bad dream. “Let me tell you, if I didn’t have all these deposits that are nonrefundable, I’d be petrified.” He is bracing for worse, contemplating converting his condos to rentals if he must. If things get really bad, Perez could tumble off The Forbes 400, which he joined three years ago.

So what to do? Tell yourself that Florida is a nightmare, not reality, and build elsewhere. Perez has 15 projects worth $3 billion in the works outside the U.S. In Argentina he is partnering with IRSA, one of the country’s largest real estate companies, to build a 13-tower complex of condos, hotels and marinas on a 200-acre site in Buenos Aires. It eventually could cost $2 billion.

In Mexico Perez just broke ground on the three-tower oceanfront Icon Vallarta, whose interiors will be designed by Philippe Starck (the creative force behind Cafe Costas in Paris). In June he visited the site with Starck and Perez’s longtime partner, billionaire Stephen Ross, who owns 25% of Related Group (to Perez’s 75%) and built the
Time Warner
Center in New York. In three days they peddled all 130 units in the first tower, raising $70 million (and taking in $14 million in those nonrefundable deposits that let Perez sleep at night). The demand–stoked by a $3 million campaign with parties in Mexico City, Puerto Vallarta, Miami, Los Angeles and Dallas–was so robust that he held back sales for the second high-rise to raise prices.

From Puerto Vallarta Perez and Ross flew on his Gulfstream to check on pending Related Group projects in Cancún and the Dominican Republic. Still other hotel condo projects are planned in Punta del Este, Uruguay and Cartagena, Colombia.

Perez planned a $3 billion condo-casino complex in Las Vegas but sold the land to W Hotels for a $100 million profit last year. In Atlanta he plans to begin construction early next year on a 270-unit condo tower in the first of up to nine new residential towers to be built on the largest blank slate in the city, a 20-acre parcel. He purchased the land for $40 million in 2006 and insists that it has at least doubled in value. (Housing collapse? You’re dreaming.) The condos will start at $400,000. Perez and another partner,
Simon Property Group
, the REIT, will break ground on the first of two Starck towers in the first quarter of 2008.

Even in Miami he still is at work, finishing up 500 Brickell, which has wireless touchpad screens in every condo and, on the rooftop, a circular “infinity edge” pool that greets the bay and the horizon beyond. He also has begun building cheaper apartments that will sell for $150,000 to $300,000; all 495 one- and two-bedroom units sold out in a month at Loft 3, and he plans a Loft 4 for downtown.

Nicknamed the “Donald Trump of the Tropics” in the Miami press, Perez started his career as a developer in low-income housing. He went to C.W. Post and the University of Michigan (both on full scholarship), graduated in 1976 and moved to Miami, where his parents had settled. He started at a city job building neighborhood projects such as community centers for the poor in Little Havana. In 1979 he hooked up with Stephen Ross of Related Cos. in New York to form Related Florida, focusing first on affordable homes. They cleared a $1 million profit in their first year and soon moved up the ladder into the luxury market.

Now Perez meets with presidents (of Argentina, Uruguay and Colombia) and contenders (he had dinner with Hillary Clinton in September). He even advises Clinton on Cuba–though he has never returned there since fleeing Castro. He dreams of one day restoring Havana’s historic architecture. It’s a beautiful city, he says, and he would love to reclaim that past. And his own.